U.S. aid to Iraq may speed up despite billions already spent

WASHINGTON (Reuters) - The United States may accelerate U.S. economic and military aid to Iraq with the end of Nuri al-Maliki's eight-year reign but will first want proof that the country's new leaders have abandoned his sectarian ways.

Maliki's surprise announcement that he would give way to Haider al-Abadi as Iraq's prime minister removes the man blamed by Washington for the revival of vicious sectarianism in Iraq and the advance of the Islamic State deep into Iraqi territory.

U.S. officials said his departure, which may not occur until September, could open the door to greater military and economic assistance to a new Iraqi government if it adopts an inclusive agenda.

Despite saying the United States had no intention of "being the Iraqi air force," President Barack Obama has also suggested U.S. air strikes could go on for months to help Iraqis fend off Islamic State fighters seeking to establish a hub of jihadism in the heart of the Arab world.

Obama, however, faces two important questions: can Abadi's new government unite Iraqis after his predecessor helped drive the Sunni minority into the jihadist camp? And is the U.S. public willing to pour more taxpayer money into a country that cost it billions of dollars and thousands of American lives since the 2003 U.S.-led invasion that toppled Saddam Hussein?

"Whatever future military assistance we continue to provide to Iraq won’t be tied specifically or solely to the new prime minister," said a U.S. defence official who spoke on condition of anonymity to discuss sensitive military planning. "To say that now that there's a new guy it will open the floodgates would be way overstating this."

A second U.S. defence official said the United States would be looking for the next government to integrate the fragmented Iraqi security forces and to provide assistance to the Kurdish minority. But putting a new government programme in place will take time, suggesting the measured pace of the administration's response to the Islamic State advance will continue.

"If all those conditions start getting set, then I think you will see the possibility of us accepting an invitation to do more substantive train, advise and assist," the official said. But if this happens, the official added, it would be slow and may take a year.

In the meantime, targeted air strikes and the provision of U.S. military equipment such as Apache helicopters is expected to continue.

Obama, who campaigned on promises to end the U.S. wars in Iraq and Afghanistan, has not yet decided how much more U.S. military action or weaponry he might support in Iraq, said a third U.S. official.

"We've seen the first press allegations of a slippery slope," said this official, who also spoke on condition of anonymity. "So you can be sure that people are concerned about what these next steps mean."

MASSIVE U.S. OUTLAY

The human and financial toll from the 2003 invasion ordered by former President George W. Bush looms heavily over policymakers contemplating what to do next in Iraq.

The United States set aside $56.3 billion (£33.72 billion) in aid for Iraq in the decade from fiscal year 2003 to 2012, according to a Congressional Research Service report published last month.

Of that total, the Pentagon spent $20.1 billion to support Iraqi security forces, many of whom quickly melted away in the north when faced with Islamic State fighters last month.

Overall aid to Iraq, one of the world's most oil-rich nations, dropped dramatically in recent years to about $590 million each in fiscal years 2013 and 2014, and $308.7 million was requested in the fiscal year to Sept. 30, 2015.

A fourth U.S. official said the administration was already discussing the kinds of weapons systems Iraqis may need to fight the Islamic State and what more Washington can do to increase Iraqi oil production.

U.S. and European Union officials, however, declined to provide details on what they might provide, saying it was too early and suggesting all sides wanted to see how the Abadi government governs.

A senior European Union official said on Friday after a meeting in Brussels of EU foreign ministers that there had not yet been any discussion within the bloc of economic support for Abadi’s government.

"Not yet. It may be a bit too early. It will come later on," said the EU official, who spoke on condition of anonymity.

Jon Alterman of the Center for Strategic and International Studies think tank said there could be a modest rise in U.S. aid but cited scepticism about the utility of such assistance and about the centrality of Iraq to U.S. national security as a result of the long American involvement in the country.

"There can be extensive security assistance, which could be a combination of weapons and training. There can be increased intelligence cooperation. There can be encouragement for U.S. companies to invest in Iraq," Alterman said.

"But, in very broad terms, the U.S. government has spent most of what it will ever spend on Iraq," he added. "While you may be able to have a tick upward from the current level, it’s very hard for me to imagine the kind of close partnership that people had been hoping for five or six years ago."

(Additional reporting by Adrian Croft in Brussels; Writing by Arshad Mohammed; Editing by Jason Szep and James Dalgleish)